Question 1

Minimum-wage laws are one reason there is always some unemployment in the U.S. economy.

Accepted Answer

When minimum-wage laws are set above the equilibrium wage rate, employers may not be willing to hire as many workers as before or may reduce the hours of existing workers in order to compensate for the higher wages they must pay. This can result in some workers becoming unemployed. Therefore, minimum-wage laws are one reason for unemployment in the U.S. economy.

Question 2

When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the quantity of labor supplied is lower and the quantity of labor demand is higher than at the equilibrium wage.

Accepted Answer

When a minimum-wage law forces the wage to remain above the equilibrium level, the quantity of labor supplied becomes higher than the quantity demanded, leading to a surplus of labor or unemployment, not the other way around.

Question 3

Unemployment insurance reduces the incentive for the unemployed to find and take new jobs.

Accepted Answer

Unemployment insurance can reduce the urgency for unemployed individuals to find and accept new jobs quickly because it provides them with a temporary source of income, potentially making them less motivated to seek employment immediately.

Question 4

Studies have shown that the design of the unemployment insurance system reduces the job search effort of the unemployed.

Accepted Answer

Research has found that the design of the unemployment insurance system, such as the amount and duration of benefits, can affect the search behavior of the unemployed. Some studies suggest that more generous benefits may reduce the urgency and intensity with which people search for work. However, other research has shown that the impact of unemployment benefits on job search can depend on individual factors like age, education level, and work history.

Question 5

When a minimum-wage law forces the wage to remain above the level that balances supply and demand, there are more workers willing to work than there are jobs, so some workers are unemployed.

Accepted Answer

This is a basic principle of economics known as the law of demand. When the price of something (in this case, labor) is artificially set above its market value (i.e. the wage rate is higher than the equilibrium wage), demand for that thing (workers) decreases and supply (the number of workers willing to work) increases, resulting in a surplus of labor (unemployment).

Question 6

When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the result is a surplus of labor.

Accepted Answer

When the minimum wage is set higher than the equilibrium wage, it creates a surplus of labor as more people are willing to work at the higher wage than there are jobs available. This results in a situation where there are more workers than jobs, leading to unemployment or underemployment.

Question 7

Structural unemployment results when the number of jobs is insufficient for the number of workers.

Accepted Answer

Structural unemployment occurs when there is a mismatch between the skills and qualifications of workers and the available job opportunities. This can result in a situation where there are workers who are willing and able to work but there are not enough jobs to meet the demand.

Question 8

Most economists agree that eliminating unemployment insurance would increase the amount of unemployment in the economy.

Accepted Answer

Most economists believe that unemployment insurance provides a safety net for individuals who lose their jobs, allowing them to spend money on goods and services, which helps to stabilize the economy. Eliminating it could reduce consumer spending, potentially leading to higher unemployment, but the statement as phrased suggests the opposite effect, which is not the consensus view.

Question 9

Most economists agree that eliminating unemployment insurance would increase the nation's overall level of well­being.

Accepted Answer

This statement is false. Most economists actually support unemployment insurance as a way to provide assistance to individuals who have lost their jobs and to stimulate economic growth by providing them with spending power. Unemployment insurance helps to stabilize the economy during recessions and reduces poverty among the unemployed, which can have socioeconomic benefits.

Question 10

Unemployment insurance causes workers to be less likely to seek guarantees of job security when they negotiate with employers over the terms of employment.

Accepted Answer

Unemployment insurance provides a safety net for workers in case they lose their job, which may make them less concerned about job security when negotiating with employers. This can lead to workers accepting jobs with less secure terms, which benefits employers but may not be in the best interests of workers.

Question 11

When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the quantity of labor supplied is higher and the quantity demanded of labor is lower than at the equilibrium wage.

Accepted Answer

When the minimum wage is set above the equilibrium wage level, it creates a surplus of labor, i.e. more people are willing to work at that wage than there are employers who are willing to hire them. This results in an increase in the quantity of labor supplied and a decrease in the quantity of labor demanded.

Question 12

Most U.S. workers have wages well above the legal minimum, so minimum-wage laws do not prevent the wage from adjusting to balance supply and demand.

Accepted Answer

This statement is true. While minimum-wage laws do set a legal minimum for wages, most workers in the United States earn wages above this minimum. Therefore, the wage can still adjust to changes in supply and demand for labor.

Question 13

A minimum wage that is below the equilibrium wage rate does not raise unemployment.

Accepted Answer

A minimum wage set below the equilibrium wage rate does not raise unemployment because it is already lower than what employers are willing to pay and what workers are willing to accept, thus it does not interfere with the labor market equilibrium.

Question 14

Minimum wage laws help explain the natural rate of unemployment if they create a surplus in any labor market.

Accepted Answer

Minimum wage laws create a surplus in the labor market because they set a price floor on wages above the equilibrium wage rate. This means that employers demand less labor at the higher wage rate, while workers supply more labor resulting in a surplus of labor, leading to unemployment. This excess unemployment caused by minimum wage laws contributes to the natural rate of unemployment.

Question 15

Some economists have argued that unemployment insurance improves the ability of the economy to match each worker with the most appropriate job.

Accepted Answer

By providing temporary financial support, unemployment insurance allows workers to spend more time searching for a job that is a good match for their skills and qualifications, rather than being forced to quickly accept any job offer out of desperation for income. This ultimately leads to a better overall match between workers and jobs, which can improve productivity and economic efficiency.

Question 16

Minimum-wage laws matter most for the least skilled and least experienced members of the labor force, such as teenagers.

Accepted Answer

Minimum-wage laws set a floor on the wages employers can pay their workers. This means that employers are not allowed to pay their workers less than the minimum wage set by law, even if that worker's productivity or skills are worth less than the minimum wage. As a result, employers may choose not to hire workers who cannot produce enough value to justify the minimum wage. This often includes teenagers who have little work experience or formal education. For this reason, minimum-wage laws can have a disproportionate impact on the least skilled and least experienced members of the labor force, such as teenagers.

Question 17

Minimum wages are the predominant reason for unemployment in the U.S. economy.

Accepted Answer

There is no conclusive evidence that minimum wages are the predominant reason for unemployment in the U.S. economy. Many factors influence unemployment rates, including technological advancements, globalization, economic cycles, and government policies. While some studies suggest that minimum wage increases may lead to job losses in some industries, others indicate that they may have little to no effect on overall employment levels. The impact of minimum wages on unemployment is a complex issue that depends on numerous variables and remains a subject of ongoing debate among economists.

Question 18

Minimum-wage laws affect all workers.

Accepted Answer

Minimum-wage laws directly affect only those workers who are earning less than the new minimum wage; workers earning above the minimum wage are not directly impacted by these changes.

Question 19

When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the result is a shortage of labor.

Accepted Answer

When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the result is a surplus of labor, meaning unemployment, not a shortage.

Question 20

Other things the same, countries that offer more generous and longer-lasting unemployment insurance benefits are likely to have higher unemployment rates.

Accepted Answer

When unemployment insurance benefits are more generous and longer-lasting, it may discourage people from actively seeking employment and reduce incentives for employers to create job opportunities, leading to a higher unemployment rate.

Quiz 10: Unemployment and Its Natural Rate

Minimum-wage laws are one reason there is always some unemployment in the U.S. economy.

When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the quantity of labor supplied is lower and the quantity of labor demand is higher than at the equilibrium wage.

Unemployment insurance reduces the incentive for the unemployed to find and take new jobs.

Studies have shown that the design of the unemployment insurance system reduces the job search effort of the unemployed.

When a minimum-wage law forces the wage to remain above the level that balances supply and demand, there are more workers willing to work than there are jobs, so some workers are unemployed.

When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the result is a surplus of labor.

Structural unemployment results when the number of jobs is insufficient for the number of workers.

Most economists agree that eliminating unemployment insurance would increase the amount of unemployment in the economy.

Most economists agree that eliminating unemployment insurance would increase the nation's overall level of wellbeing.

Unemployment insurance causes workers to be less likely to seek guarantees of job security when they negotiate with employers over the terms of employment.

When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the quantity of labor supplied is higher and the quantity demanded of labor is lower than at the equilibrium wage.

Most U.S. workers have wages well above the legal minimum, so minimum-wage laws do not prevent the wage from adjusting to balance supply and demand.

A minimum wage that is below the equilibrium wage rate does not raise unemployment.

Minimum wage laws help explain the natural rate of unemployment if they create a surplus in any labor market.

Some economists have argued that unemployment insurance improves the ability of the economy to match each worker with the most appropriate job.

Minimum-wage laws matter most for the least skilled and least experienced members of the labor force, such as teenagers.

Minimum wages are the predominant reason for unemployment in the U.S. economy.

Minimum-wage laws affect all workers.

When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the result is a shortage of labor.

Other things the same, countries that offer more generous and longer-lasting unemployment insurance benefits are likely to have higher unemployment rates.

Quiz 10: Unemployment and Its Natural Rate

Minimum-wage laws are one reason there is always some unemployment in the U.S. economy.

When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the quantity of labor supplied is lower and the quantity of labor demand is higher than at the equilibrium wage.

Unemployment insurance reduces the incentive for the unemployed to find and take new jobs.

Studies have shown that the design of the unemployment insurance system reduces the job search effort of the unemployed.

When a minimum-wage law forces the wage to remain above the level that balances supply and demand, there are more workers willing to work than there are jobs, so some workers are unemployed.

When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the result is a surplus of labor.

Structural unemployment results when the number of jobs is insufficient for the number of workers.

Most economists agree that eliminating unemployment insurance would increase the amount of unemployment in the economy.

Most economists agree that eliminating unemployment insurance would increase the nation's overall level of well­being.

Unemployment insurance causes workers to be less likely to seek guarantees of job security when they negotiate with employers over the terms of employment.

When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the quantity of labor supplied is higher and the quantity demanded of labor is lower than at the equilibrium wage.

Most U.S. workers have wages well above the legal minimum, so minimum-wage laws do not prevent the wage from adjusting to balance supply and demand.

A minimum wage that is below the equilibrium wage rate does not raise unemployment.

Minimum wage laws help explain the natural rate of unemployment if they create a surplus in any labor market.

Some economists have argued that unemployment insurance improves the ability of the economy to match each worker with the most appropriate job.

Minimum-wage laws matter most for the least skilled and least experienced members of the labor force, such as teenagers.

Minimum wages are the predominant reason for unemployment in the U.S. economy.

Minimum-wage laws affect all workers.

When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the result is a shortage of labor.

Other things the same, countries that offer more generous and longer-lasting unemployment insurance benefits are likely to have higher unemployment rates.

Most economists agree that eliminating unemployment insurance would increase the nation's overall level of wellbeing.